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What Is Moving the Markets

DETROIT (Reuters) - Volkswagen AG executive Oliver Schmidt pleaded guilty on Friday in U.S. District Court in Detroit in connection with a massive diesel emissions scandal that has cost the German automaker as much as $25 billion.

WASHINGTON (Reuters) - U.S. employers hired more workers than expected in July and raised their wages, signs of labor market tightness that likely clears the way for the Federal Reserve to announce a plan to start shrinking its massive bond portfolio.

(Reuters) - U.S. stocks pared gains to trade slightly up in early afternoon trading on Friday, with the Dow on track to close higher for the ninth straight day after data showed U.S. employers hired more workers than expected in July.

(Reuters) - Wells Fargo & Co will pay the U.S. government $108 million to settle a whistleblower lawsuit claiming it charged military veterans hidden fees to refinance their mortgages, and concealed the fees when applying for federal loan guarantees.

TOKYO (Reuters) - Toyota Motor Corp said on Friday it planned to take a 5 percent share of smaller Japanese rival Mazda Motor Corp, as part of an alliance that will see the two build a $1.6 billion U.S. assembly plant and work together on electric vehicles.

(Reuters) - Automatic Data Processing Inc said on Friday it had rejected a call from William Ackman's activist hedge fund Pershing Square Capital Management LP for more time in his bid to gain control of the U.S. human resources outsourcing company.

ZURICH (Reuters) - A big investor in Clariant and Huntsman backs the chemical companies' planned $20 billion merger, saying it would unlock synergies and lift profits more than any alternative from activists seeking to derail the deal.

(Reuters) - Activist investor Elliott Management Corp on Friday disclosed a 6 percent stake in chipmaker NXP Semiconductors NV , which is being bought by Qualcomm Inc for $38 billion, and indicated it could engage in talks to boost the offer price.

President Donald Trump's strategy of publicly shaming Attorney General Jeff Sessions to force him to aggressively pursue the leakers who have been a persistent source of agitation for his administration appears to have worked. After announcing during a press conference last month that he wanted Sessions "to go full-bore" in his pursuit of leakers, the "beleaguered" attorney general appears to be doing exactly that.

During a live press briefing on Friday that was tantamount to a declaration of war, Sessions said the Department of Justice will be cracking down on leaks of classified information, and is considering subpoenaing journalists to force them to reveal their sources in the Trump administration.

Furthermore, the attorney general boasted that scrutiny of leakers is already a priority for the DOJ, claiming that the number of open leak investigations has tripled during the Trump administration. Under the new policy framework, the FBI will create a counterintelligence unit specifically to manage these cases, according to the Hill.

"We are taking a stand," Mr Sessions said. "This culture of leaking must stop," according to the Financial Times. < ...

Just saw this chart on Zero Hedge yesterday, which takes me back to the days of graduate school and an unfinished Ph.D. dissertation.

One part of the "Dusenberry Effect" basically states that consumers do not give up their consumption patterns very easy even if their incomes decline.

They, in effect, "ratchet" down their living standard very slowly by first having a second wage earner enter the workforce as we saw in the 1970's when women began to enter the workforce en masse and then by taking on debt to finance their previous standard of living.

...[a] significant part of Duesenberry's relative income hypothesis is that it suggests that when income of individuals or households falls, their consumption expenditure does not fall much. This is often called a ratchet effect. This is because, according to Duesenberry, the people try to maintain their consumption at the highest level attained earlier. This is partly due to the demon­stration effect explained above. People do not want to show to their neighbours that they no longer afford to maintain their high standard of living.

So what do you do when you've just burned through a record $1.2 billion of cash in one quarter, expect to burn an additional $2 billion in capex in the second half of the year and haven't a prayer of generating positive earnings at any point in the near future? Well, you slash your product prices, of course.

Apparently this is exactly the strategy that Elon Musk has decided to pursue with his Model X after quietly slashing its price tag from $82,500 to a far more affordable $79,500 last night. Tesla explained the price cut via the following statement:

"When we launched Model X 75D, it had a low gross margin. As we've achieved efficiencies, we are able to lower the price and pass along more value to our customers."

But it wasn't just the base MSRP on the Model X that got a price cut, as electrek points out, Tesla also decided to cut prices on the their Model S and throw in their $5,000 premium package for free.

All dual Motor Model S vehicles also got a slight $1,500 price drop, but the Model S P100D and Model X P100D were the most affected by last night's changes.

Tesla updated the options of the vehicles to add more premium features as standards.

The "$5,000" Premium Package is now being absorbed into standard features for top versions of Tesla's vehicles. Here's the Premium package and the new standard features on a Model S P100D:

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